Between October 2012 and August 2017, an absence of major catastrophe events led to Insurance Linked Securities (ILS) funds posting positive returns every month for almost 5 consecutive years. During that period, the ILS market doubled from around $44 billion in 2012 to $89 billion in 2017. However, since 2017, a series of major catastrophe events has caused challenges for the industry, suppressing the returns of ILS funds, and, in 2019, led to the market reducing in size for the first time since the financial crisis of 2008.

In this article, we look in detail at some of the major losses that have occurred since 2017 and why they have proved challenging to set reserves for, creating heightened uncertainty in the valuations of ILS funds.